MULTIDISCIPLINARY CASE STUDIES - ICSI

1 ISTUDY MATERIAL PROFESSIONAL PROGRAMMEMULTIDISCIPLINARY case STUDIESMODULE 3 PAPER 8ii THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to to StudentsStudents may please note that the case laws/ STUDIES are indicative only. For detailed understanding of respective subjects, it is advised to refer to amendments related to Regulations/Rules/Act/Circular/ Notifications etc. The student are advised to study the orders relating to the subjects under the syllabus, by different authorities/judiciaries including Supreme Court, High Court, NCLT, NCLAT, CCI, Income Tax authorities etc. Disclaimer :Although due care and diligence have been taken in preparation of this Study Material , the Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this Study Material.

2 Anyone wishing to act on the basis of the material contained herein should do so after cross checking with the original Sample case STUDIES & Suggested Solutions of MULTIDISCIPLINARY case STUDIES have been prepared by competent persons to enable the students for preparing the Institute s examinations. It is, however, to be noted that the answers are only model answers, and there can be alternative solutions available for the questions. The Institute is not in any way responsible for the correctness or otherwise of the answers. students are expected to be well versed with the amendments in the Laws/ Rules made upto six months prior to the date of Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, and Printed at SAP Printers, Mumbai/October 2020iiiiiPROFESSIONAL PROGRAMME Module 3 Paper 8 MULTIDISCIPLINARY case STUDIES (Max Marks 100)SYLLABUSO bjectiveTo test the students in their theoretical, practical and problem solving ContentsCase STUDIES mainly on the following areas: 1.

3 Corporate Laws including Company Law 2. Securities Laws 3. FEMA and other Economic and Business Legislations 4. Insolvency Law 5. Competition Law 6. Business Strategy and Management 7. Interpretation of Law 8. Governance IssuesivCONTENTSMULTIDISCIPLINARY case STUDIES Lesson Tittle Page No. 1. Corporate Laws Including Company Law 1 2. Securities Laws 45 3. FEMA and Other Economic and Business Legislations 87 4. Insolvency Law 145 5. Competition Law 189 6. Business Strategy and Management 201 7. Interpretation of Law 219 8. Governance Issues 263 Sample case STUDIES & Suggested Solutions 353 Test Paper 3911 n Corporate Laws Including Company Law 11 Corporate Laws Including Company Law12 PP-MCS1) 2020Mr. Pankaj Kumar Mishra (Appellant) vs. Registrar of Companies, Mumbai & Ors. (Respondents)NCLATC ompany Appeal (AT) No.

4 121 of 2020 Justice Jarat Kumar Jain Member (Judicial)Balvinder Singh Member (Technical)The Tribunal must give a reasonable opportunity of making representations and of being heard before passing an order, to the Registrar, the Company and all the persons concerned under Section 252 (1) of the Companies Act, of the case The name of the Company (Viking Ship Mangers Pvt. Ltd.) was struck off by ROC Mumbai from the Register of Companies. The Principal Commissioner of Income Tax-15, Mumbai (Respondent No. 2 herein) challenged the order of ROC before the NCLT, Mumbai bench (Tribunal) under Section 252 of the Companies Act, 2013. It is stated before the Tribunal that the Company has certain Financial transactions that have been entered into by the Company for the Assessment year 2011-12 and information regarding this were received from the office of ITO Income Tax Officer 15 (3) (2) Mumbai.

5 However, no return of income has been filed. Therefore, notice under Section 148 of the IT Act, 1961 has been issued for Assessment year 2011-12 proposing to assess/reassess the income. The Company has been struck off from the Register of Companies. Therefore, it is difficult to assess the defunct Company and it will cause huge loss of revenue to the Government of India. Hence, it was prayed that the name of the Company be restore in the Register of Companies. The Authorized representative for the Registrar of Companies submitted before the Tribunal that they do not have any objection to restore the name of the Company in the Register of Companies. The NCLT, Mumbai Bench by the impugned order allowed the Appeal and directed to restore the name of the Company in the Register of Companies. However, before passing of impugned order no notice has been served on the Company, but the Company was arrayed as the aggrieved with this order, the Appellant Ex-Director and Majority Shareholder and Power of Attorney Holder of the Company has filed this Appeal.

6 Appellant submitted that Section 252 (1) of the Companies Act, 2013, provides that before passing any order under this Section, the Tribunal must give a reasonable opportunity of making representations and of being heard to the Registrar, the Company and all the persons concerned. Rule 37 of the NCLT Rules, 2016 also provides that the Tribunal shall issue notice to the Respondent to show cause against the Application or Petition on date of hearing to be specified in the main contention of Appellant was:Whether the order given by the Tribunal of restoring the name of the company in Register of Companies is sustainable in Law, as it has been passed without giving any reasonable opportunity of making representations or of being heard to the Appellant?JudgementThe NCLAT held that without giving any opportunity of being heard, the order has been passed by the NCLT.

7 1 n Corporate Laws Including Company Law 3 Hence, the order is not sustainable in law. Therefore, it is set aside, and the matter is remitted back to the NCLT, Mumbai bench with the direction that after hearing the parties decide the said appeal under Section 252 of the Companies Act, 2013, as per law without influence by its earlier ) 2020 Alibaba Nabibasha (Petitioner) vs. Small Farmers Agri-Business Consortium & Ors.(Respondents)Delhi High CourtCRL. 1602/2020, CRL. 9935/2020 Justice V. Kameswar RaoAfter resignation, Director can t be held responsible for daily affairs of Company including Cheques issued and dishonouredFact of the caseThe petition was filed seeking quashing of five complaint cases initiated against the Petitioner. These complaint cases are primarily grounded on the return of five cheques which were issued on behalf of the Respondent company for a total amount of Rs.

8 45 Lakhs. Petitioner submitted that he ceased to be the Director of the Respondent company 27. 10. 2010, at least eight years prior to the issuance of the cheques in question and the resignation of the Petitioner was also notified to the Registrar of Companies by the Respondent by filing Form 32 dated 04. , which is a public Petitioner contended that he was not the Director when the underlying contract was executed between the Respondent and Respondent , nor when the cheques were issued and when they were to the Respondent, the Petitioner was involved in the discussion before an agreement was executed between the Respondent and the Respondent Further, the Petitioner being a responsible Director of accused Respondent Company participated in meetings and assisted the officials of the Respondent who had visited the Respondent for verification of its financial and physical :The contention of the Petitioner was:Whether Director of the Company after resignation is still held responsible for daily affairs of Company including Cheques issued and dishonoured?

9 JudgementDelhi High Court held that, in cases where the accused has resigned from the Company and Form 32 has also been submitted with the Registrar of Companies then in such cases if the cheques are subsequently issued and dishonoured, it cannot be said that such an accused is in-charge of and responsible for the conduct of the day-to-day affairs of the Company, as contemplated in Section 141 of the NI Act. Thus, Petitioner after his resignation cannot continue to be held responsible for the actions of the Company including the issuance of cheques and dishonour of the same. Hence, complaint cases filed under Section 138 of the NI Act, against the petitioner are PP-MCS3) 2020Dr. Rajesh Kumar Yaduvanshi (Petitioner) vs. Serious Fraud Investigation Office (SFIO) & Anr. (Respondents)Delhi High CourtCRL. REV. P. 1308/2019 and CRL.

10 Nos. 43209/2019, 3644/2020, 7626/2020, 7627/2020 & 10502/2020 Justice Vibhu BakhruPerson as a Nominee Director of the Company can t be summoned for offences in respect of Sections 128, 129, 448 read with Section 447 of the Companies Act, 2013, without any specific allegations against him in Investigation report of being complicit or having acted in bad faith, when he is not involved in the day to day affairs of the company as well as not assigned with any of executive work of the of the caseThe petitioner has filed the present petition impugning a summoning order dated August 16, 2019 issued by the learned ASJ in Complaint case No. 770/2019 captioned Serious Fraud Investigation Office (SFIO) vs. Bhushan Steel Limited and Ors. , to the limited extent that it directs issuance of summons to the petitioner. The learned Court had found that there was sufficient material placed on record against the petitioner for him to face prosecution in respect of offences under Sections 128, 129, 448 read with Section 447 of the Companies Act, 2013.